FinTechTalk: Transforming your Anti-Money Laundering systems

On 21 November, FintechTalk host Charles Orton-Jones was joined by Denitsa Rebaine, Sanctions Compliance Officer; and Lena Mokretsova, Financial Crime Compliance Manager, Vice President.

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Global enforcement fines increased to $5.65 billion in Q3 2023, up by 30% since the start of the year, according to a new report released by Corlytics. Recent examples include the US Securities and Exchange Commission (SEC) handing a $25 million penalty to Deutsche Bank subsidiary DWS Investment Management Americas for anti-money laundering violations. The severity of these fines reflect the deficiencies that financial institutions demonstrate in anti-money laundering compliance. There is also a shift taking place from rule-based to behaviour-based monitoring. Thanks to AI, you can now look at vast data sets in a fraction of the time monitoring took previously. 

The challenges of monitoring

Although anti-money laundering regulation seems to be rather porous, without it, criminals could take even more advantage of the financial systems. In the AML compliance industry, you always work based on suspicion and not certainty. Also, nowadays, AML and sanctions work hand in hand. Sanction evasion export controls are increasingly in the focus of compliance agencies. AML requires a complex set of skills with data analytics and IT skills becoming the most important. While AML has been seen as one function, there is now a new approach maintaining that it’s the responsibility of the whole organisation. One way of increasing AML efficiency is linking its standard to bankers’ salaries and bonuses. Setting up a shell company is rather easy and arts and luxury items or property can all serve as tools of money laundering. Once the money is in a bank account outside Western jurisdictions, it’s easy to move it around via bank accounts with major banks, fake companies, or just take the money out in cash from ATMs, etc. 

Panels’s advice

• Reading regulation updates is time well spent. 
• So called privacy coins designed to prioritise the privacy and anonymity of the user are great tools for criminals to launder their illegal money. 
• Trade finance is an alternative and efficient way of laundering big ums of money thanks to the absence of international cooperation between authorities.